The Impact of International Currency and Financial Integration on the Countries Economic Development: European Experience

Abstract

In the article, the author makes an attempt to identify economic effects for the countries participating in the currency union based on a detailed analysis of the studies of foreign economists. The world experience in the formation of currency unions is diverse, there are more than 100 integration associations in the world, which are characterized by their heterogeneity and uniqueness. However, of all regional unions, only the European Union has achieved a high level of integration, and the euro has become a full-fledged regional currency. Thus, most of the studies within the framework of this topic are devoted to the experience of the development of the eurozone. Most empirical studies reveal positive effects from the introduction of a single currency in the form of increased trade flows and incomes, reduced inflation and exchange rate volatility. On the other hand, other studies argue that a monetary union does not have a positive impact on the level of development of the national economy, but rather increases macroeconomic volatility in the participating countries. As a result of the study, the author's interpretation of the benefits and costs of the country's entry into international monetary and financial integration relations is given. It is concluded that the effects of the intensification of economic integration are different for each period of time and for a particular regional association. The validity of the conclusions was carried out on the basis of general scientific methods: monographic survey, analytical and systematic approaches, comparative and historical-logical analyzes, methods of induction and deduction.

Key words: monetary union, economic integration, single currency.